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Schroders multi mix

Schroders has teamed up with fund research and ratings agency Standard & Poor&#39s to offer two Ucits III compliant multi-manager funds.

The Schroder S&P high alpha fund is an aggressively managed fund which can invest up to 10 per cent in alternative investments such as hedge funds, private equity and property. It aims to outperform the Lipper Active Managed sector by 3 per cent a year after charges.

The fund will invest in between 12 and 15 funds. These funds will be identified as the best in the market following a lengthy research process which combines the skills of Standard & Poor&#39s with Schroders&#39 in-house researchers.

S&P research is widely available to other investment houses but an exclusive agreement with Schroders means S&P will provide a service over and above the usual services. This will involve researching funds specifically for the Schroders fund.

S&P&#39s recommendations will form a shortlist which will be reviewed by Schroders, along with funds that do not make S&P&#39s shortlist. To manage risk in the portfolio, Schroders will rely on computer software called Prism, which allows the multi-manager team to see what would happen if the fund weightings were altered.

This fund has a relatively concentrated portfolio for a multi-manager fund and while this means there is less chance of returns being diluted by the inclusion of too many funds, the drawback is that there is less diversity. The performance of every fund will matter and while underperforming funds can simply be replaced, it is important to find a replacement which will not upset the balance of the portfolio.

The fund&#39s ability to offer mixed asset classes under Ucits III means a small part of the portfolio will go into alternative investments such as property, private equity and hedge funds. This will provide greater diversity but the challenge will be to keep investors informed on what they are investing in without making it too complicated to understand.

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18th December 201812:39 pm

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